NEW YORK (AP) — AIG's Martin Sullivan lost his job as the head of the world's largest insurer, becoming the latest chief executive officer to be sent packing after racking up huge losses on bad mortgage-market bets.

American International Group Inc., which employs some 200 people in Bermuda, on Sunday named former Citigroup Inc. executive Robert Willumstad to replace Sullivan at the company's helm, effective immediately.

Sullivan had come under increasing pressure from angry shareholders after New York-based AIG — with $1.05 trillion in assets — lost $7.8 billion during the first quarter of the year due to investments and contracts tied to bad loans.

The insurer's first-quarter deficit was even more massive than its fourth-quarter loss of more than $5 billion. After its two straight quarterly losses, AIG revealed plans to raise $20 billion in fresh capital — but investors reacted sceptically, unsure that extra cash would solve the insurer's problems.

Shares of AIG have fallen more than 50 percent over the past 12 months. Its shares fell 49 cents, or 1.4 percent, to $33.69 in midday trading Monday. That is near the low end of their 52-week range of $32.82 to $72.91.

"In the coming months, we will conduct a thorough strategic and operational review of AIG's businesses and their performance," Willumstad, 62, said in a statement on Sunday. "The board and I recognise that results over the past two quarters have been unacceptable, but we are confident in AIG's future."

Sullivan, 53, a native of England who had worked with AIG for 37 years, now joins the long list of CEOs who have been pushed out since the credit crisis started slamming the financial services industry last year. That list includes Citigroup's Charles Prince, Merrill Lynch & Co.'s Stanley O'Neal and Wachovia Corp.'s Ken Thompson.

"Boards of directors are becoming less tolerant, in general," said Scott Fullman, director of derivatives investment strategy for WJB Capital Group in New York. "The boards of directors of these companies are basically having to step up and be more anticipatory, and take steps show their shareholders and show regulators that they mean business, and that they want to return to profitability."

The company said it will hold a conference call at Monday morning with investors to discuss the management changes.

AIG named Willumstad chairman of the board in fall 2006, about a year after he left his post as president and chief operating officer at Citigroup. Citigroup had passed him over for the CEO job — which went instead to the now-dethroned Prince.

Stephen Bollenbach, the former CEO of Hilton Hotels Corp., will be AIG's lead director.

Besides big losses, AIG is reportedly facing a regulatory probe. The Securities and Exchange Commission reportedly began looking into whether AIG had overstated the value of contracts called credit default swaps.

Sullivan — who received compensation last year of $13.9 million — replaced Maurice (Hank) Greenberg as chief executive in March 2005. Greenberg, forced out amid accusations from then-New York State Attorney General Eliot Spitzer of fraudulent accounting, still controls the largest block of stock in AIG.

Greenberg has been one of most outspoken of AIG's shareholders, many of whom have blamed poor management for AIG's financial troubles. In a May regulatory filing, Greenberg wrote: "AIG is in crisis."

News of Sullivan's dismissal arrives ahead of this week's quarterly results from three major investment banks: Lehman Brothers Holdings Inc., Goldman Sachs & Co. and Morgan Stanley. Wall Street expects the three reports to offer some insight into how the beleaguered financial sector is faring a year into the credit crisis — and whether additional management shake-ups may be in store.